The Bank of Spain estimates that a greater densification of the six major urban areas of the country would allow for the addition of between 500,000 and 1.2 million homes to the residential supply. The agency proposes to make more intense use of the land that is still under urban development, where the expected density is lower than that of the already consolidated areas.
The highest estimate corresponds to a theoretical scenario in which the areas in transformation reach the average density of the consolidated urban spaces. In a more moderate assumption, following the gradient of densification observed in those areas, the increase would be around 500,000 homes. The analysis refers to Madrid, Barcelona, Málaga, Valencia, Zaragoza, and Sevilla and does not mean that those houses are currently projected or can be built immediately.
Madrid would concentrate 67% of the additional homes in the scenario of 500,000 units, while Barcelona would contribute another 21%. The Bank of Spain itself presents densification as one of the available alternatives for municipalities facing land scarcity and not as an automatic solution to the housing problem.
The proposal is based on a difference that the supervisor identifies between the already built cities and the new developments. The consolidated areas of Valencia, Zaragoza, and Sevilla present approximately 1.7 times more density than the development areas, while in Barcelona, Madrid, and Málaga the ratio is between two and 2.5 times.
The new neighborhoods are built with lower density
The analysis of the Bank of Spain indicates that the urban planning of the areas that are still in transformation contemplates, on average, a residential density lower than that existing in the consolidated parts of the same urban areas.
The difference is partly explained by the high densification that Spanish cities experienced during the second half of the 20th century. The agency also points out that Spanish urban areas are, in comparative terms, more dispersed than other major European areas and that density decreases more sharply from the centers to the peripheries.
The approach is not solely about increasing the height of buildings. The estimate is based on making more intensive use of the developable land that is already contemplated in the transformation processes, modifying the expected residential density in those areas.
The lack of housing is not explained only by land
The proposal appears in a context in which the Spanish residential supply is reacting slowly to the growth of demand. The 2025 Annual Report of the Bank of Spain indicates that the increase in demand and prices would have led to an expected sustained increase in investment and housing production, but the response of the supply continues to be limited.
Among the obstacles identified by the agency are the scarcity of buildable land, the slowness in the execution of the planned housing, and the difficulties associated with urban planning and management. To these factors are added problems of productivity, business size, and availability of labor in the construction sector.
The construction activity is also not responding at the pace that residential pressure would require. The Bank of Spain indicates that in 2025 about 92,000 homes were completed, 9% less than the previous year, while residential investment remains below the levels recorded during other periods of strong demand growth.
More housing also requires more infrastructure
The Bank of Spain warns that greater densification cannot be approached solely from the number of homes. The growth of urban areas requires planning and financing simultaneously the necessary infrastructure to absorb a larger population.
Public and private transport is one of the elements that the agency considers necessary to strengthen. It also points out the need to expand the provision of public services, including educational and health services, to prevent the increase in residents from generating additional congestion costs.
The capacity to increase residential supply will therefore depend on decisions that correspond to the administrations responsible for urban planning and investment in services and infrastructure. Densification appears in the report as a tool available to use the land already designated for new developments more intensively.